Expert View SELLING THE


FAMILY BUSINESS by Jenny Burke


Corporate partner Forbes


Selling a family business is a complex exercise, often including preparing the company for sale, tax planning, valuing and marketing the business, negotiating price and terms and performing due diligence before closing the transaction.


While many family business owners dream of passing ownership onto future generations, keeping a business within the family isn’t always a viable option and succession planning can be a challenging aspect of operating a family business.


Succession or sale?


It’s important to consider the process of transition and ownership. An owner must establish whether the business be sold to a third party or the next generation.


Providing there are members of the family who are ready and willing to assume ownership, then owners must decide whether to split the ownership whilst factoring in whether dividing the business equally is in its best interests.


In particular, should ownership be transferred based on relationship


“By listening to our customers and reacting to market change, we have become one of the UK’s leading HVAC control brands and we are excited about joining the IMI family and the opportunities this will bring.


“We are particularly excited about the growth potential of the business in new territories and our joint vision of creating a better more energy efficient world.”


In another energy sector deal, Bamber Bridge based Freedom Heat Pumps has been acquired for an undisclosed sum.


The heat pump distribution company is now aiming to continue its expansion following its acquisition by a distributor of fuel and lubricants.


The buyer was Warrington company Certas Energy, part of the FTSE 100 DCC Group and is another stage on its “energy transition roadmap”.


Freedom Heat Pumps has experienced a sustained period of growth and is on course to treble its revenue across a two-year period.


It opened a new 15,000 sq ft warehouse facility in Bamber Bridge in 2021 and has grown its staff numbers from seven to 25 over two years. The company supplies customers across the UK with ground and air source heat pump equipment as well as offering training and support.


Certas has been highly active within the acquisitions market having previously acquired multiple companies in recent


or proportionally to management responsibility? Is there going to be active involvement or passive shareholding?


Alternatively, there may be a scenario where an owner may have no choice but to pursue an exit rather than a succession, particularly if there is no ‘next-generation’ ready, and in this instance an owner will want to ensure he or she receives maximum value on sale of the business.


Method?


One method of sale is via management buyout, whereby the management team in the business are able to acquire ownership of the business for a smooth internal transaction.


Alternatively, an owner may wish to gift the business to family members – each of which give rise to various tax implications.


Before proceeding, a seller should determine an appropriate timeline, structure the sale thoughtfully and consider seeking advice in relation to the tax consequences when doing so.


times. It says the acquisition will allow it to strengthen its position in the sector while enabling further growth and development,


Freedom’s managing director Chris Higgs said the acquisition represented a “strong opportunity” for continued growth from its Lancashire base.


He said it was now looking to continue that growth trajectory during the coming years through expansion opportunities across the UK. And he added: “The heat pump industry is continuing to grow and there are expected to be 600,000 heat pumps installed annually across the UK by 2028.”


We are particularly


excited about the growth potential


of the business in new territories


Tom Eatough, corporate director at KBS Corporate Finance, advised the Lancashire business. He said: “Completing a transaction in the midst of a turbulent economic and political backdrop presented its challenges, but Freedom is a high-quality business in an exciting sector, and I am sure it will be a great success for both sides moving forward.”


Steve Bell Corporate finance director


@pcaltd pierce-c.-a.-limited @PierceCA


CREATING VALUE THROUGH THE


DISPOSAL KEYHOLE Increasing interest rates and 1980’s levels of inflation mean it has never been more important to consider how you attract buyers to your business.


Irrespective of these economic headwinds, our recent experience of the disposal market is that it remains robust. We are active across, telecoms, manufacturing, consultancy, engineering, and technology and are seeing highly acquisitive buyers in each of these and other sectors.


Many sellers actively look to sell the business independently or through an “estate agent” type service and their experience is that they are plagued by “tyre-kickers” who are unable to match the sellers’ value expectations.


These disposal channels are unable to create value in the transaction because of their generic approach to a transaction. Creating value is more than simply presenting the financial statements and waiting for offers to roll-in.


The Pierce Corporate Finance team take time to understand each client and their business: what drives income, key client relationships, key management and such.


We pull all this information together in our Information memorandum, which is the company’s window to the world and fundamental in creating value. It will be the first significant contact any buyer will have with the business, and it will shape all further discussions. Our team engage proactively with each selected buyer, ensuring they understand the value in your business.


Being active on both acquisitions and disposals gives the Pierce team a unique insight into the market and we are happy to discuss how we can deliver value to your transaction.


For more information please visit www.pierce.co.uk


or call 01254 688100


LANCASHIREBUSINESSVIEW.CO.UK


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DEALMAKERS


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